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Income Tax Appellate Tribunal - Kolkata

Peerless General Finance & Investment ... vs Joint Commissioner Of Income Tax on 7 March, 2003

Equivalent citations: (2003)79TTJ(KOL)915

ORDER

B.K. Mitra, J.M.

1. The appeals filed by the assesses are directed against the common order dt. 16th Dec., 1998, passed by the CIT(A) for the asst. yrs. 1985-86 and 1986-87.

2. The main effective common ground in these cases is that the lower authorities refused to carry forward the business loss of the assessee for the asst. yrs. 1985-86 and 1986-87 for setting off with his business income for subsequent assessment year on the ground that the returns for the said assessment years were filed late.

3. The learned counsel for the assessee stated that the lower authorities were not justified in refusing to carry forward the business loss claimed by the assessee. It was further contended that while refusing to carry forward the business loss the AO failed to take note of several judicial decisions to the effect that return of income filed under Section 139(4) should be deemed to have been filed under Section 139 of the IT Act and consequently, the business loss determined on the basis of such belated return is required to be carried forward for set off with the business income of the assessee the subsequent assessment year, The learned counsel placed reliance on the judgment of the Hon'ble Calcutta High Court in the case of CIT v. Bangabasi Theatre (P) Ltd, (1993) 71 Taxman 408 (Cal) wherein it has categorically been stated by the Hon'ble High Court that in respect of Section 80 r/w Sections 139, 72 and 80 of the IT Act, 1961, for the asst. yr. 1984-85 decision in the case of Presidency Medical Centre (P) Ltd. v. CIT (1977) 108 ITR 838 (Cal) will govern the asst. yr. 1984-85 and, therefore, even where the assessee filed his loss return for the asst. yr. 1984-85 beyond the period prescribed under Section 139(3) the assessee was entitled to carry forward and set off of business loss suffered by the assessee. The learned counsel further brought to our notice the decision rendered in Presidency Medical Centre (P) Ltd. (supra) wherein it was held that Circular No. 1807, dt. 14th May, 1985, will govern the asst. yr. 1984-85. It has been laid down in the said circular that the Department accepted the decision rendered in Presidency Medical Centre (P) Ltd.'s case (supra). It was brought to our notice that the principle laid down in Presidency Medical Centre (P) Ltd.'s case (supra) was applied even after the said amendment made in 1970. It was further held that the changes made in 1986 will come into force on and from the asst. yr. 1987-88 which will not take out the asst. yr. 1984-85 from the ambit of the decision in Presidency Medical Centre (P) Ltd.'s case (supra). In this case the learned counsel has brought to our notice the judgment of the Hon'ble Madhya Pradesh High Court in the case of CIT v. Dogar Tools (P) Ltd. (1998) 232 ITR 616 (MP) which supports the claim of the assessee, The learned counsel further relied on the orders of the ITAT, A-Bench, Calcutta in ITA No. 1953/Del/1990 and ITA No. 2045/Cal/1988 which fully support the claim of the assessee.

4. The learned Departmental Representative supported the order of the lower authorities.

5. We have heard the rival submissions and gone through the record. On a careful consideration of the facts of the case and the case law cited by the learned counsel, we are of the opinion that the order of the CIT(A) is not in accordance with the provisions of law and the same should have been quashed.

6. In view of the above foregoing discussions we are of the opinion that the assessee was entitled for the benefit of carry forward of loss.

7. In the result, the appeals are allowed.

Pramod Kumar, A.M.

8. I find myself in respectful disagreement with the views expressed by learned JM and, therefore, with his leave and consent, I proceed to draft this separate order.

9. Briefly the facts. The assessee-company, for the relevant previous years, filed its income-tax returns beyond the time-limit set out in Section 139(1) of the IT Act and admittedly no extension of time was also sought by the assessee. The income-tax return for the asst. yr. 1985-86 was filed on 14th Oct., 1986, while the income-tax return for the asst. yr. 1986-87 could only be filed on 30th Oct., 1987. It was in this backdrop of facts that the AO declined carry forward of losses of Rs. 1,03,17,30,191 for the asst. yr. 1986-87 and of Rs. 76,46,98,933 for the asst. yr. 1985-86 by observing that these losses 'shall not be carried forward in view of late submission of income-tax returns'. Aggrieved by AO's declining to carry forward the aforesaid losses aggregating to Rs. 179.64 crores, the assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) observed that the law as it stood at the material point of time did not allow carry forward of losses in case of late filing of income-tax returns, unless any extension of time is sought by the assessee. Since even before the CIT(A) the assessee did not file any evidence of having sought extension of time and since the returns filed by the assessee-company were admittedly filed beyond time-limit set out in Section 139(1) of the Act, CIT(A) upheld the stand of the AO. Aggrieved by the orders of the CIT(A), the assessee is in further appeal before us.

10. Rival contentions are conscientiously heard, orders of the authorities below carefully perused and applicable legal provisions, as indeed the judicial precedents on the issue in appeal, duly deliberated upon.

11. I find that in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. v. CIT (1993) 204 ITR 23 (Cal), one of the questions before Their Lordships of Hon'ble Calcutta High Court was :

"Whether the Tribunal was right in holding that the return for the asst. yr. 1983-84 having been filed on 2nd July, 1985, the amended provision of Section 80 effective from 1st April, 1985, was applicable and hence the loss determined was not to be carried forward ?"

12. It was in this context that Their Lordships, vide order dt. 3lst March, 1993, inter alia, observed as follows :

"As regards the second question (i.e., the question reproduced above), it may be said that the amendment in Section 80 is effective from 1st April, 1985, requiring a return of loss to be filed under Section 139(1) as a prerequisite for determination of loss for purpose of carry forward and set off. The amendment cannot apply retrospectively. It is admitted position that, in this case, the assessment year involved is 1983-84. Therefore, the return filed under Section 139(4) is not governed by the amended Section 80. It is the unamended Section 80 that should govern the assessee's case for the instant assessment year being a year earlier than the asst. yr. 1985-86. It cannot be disputed that the decision of this Court in Presidency Medical Centre (P) Ltd. v. CIT (1977) 108 ITR 838 (Cal), shall squarely apply to this case and, accordingly, the loss determined on the basis of a return under Section 139 is entitled to the benefit of the carry forward and set off. The amendment has not affected the position of law as declared by the said decision in respect of loss arising from assessment year earlier than the asst. yr.

1985-86. Our attention was brought to an instruction of the Board [Instruction No. 1607 (F. No. 225/240/78-II/A-II) dt. 14th March, 1985], wherein the Board has directed that the disqualification for carry forward and set off of loss determined in pursuance of a belated return shall be effective in respect of the assessment year subsequent to the asst. yr. 1984-85. Our attention has also been drawn to paras 14.1, 14.2 and 14.3 of Circular No. 397, dt. 16th Oct., 1984 [(1985) 152 ITR (St) 29). The extract of the relevant portion of the said circular is set out below :

'Submission of return for losses--Section 80 14.1 Under the existing provisions of Section 80 relating to submission of return for losses, no loss is allowed to be carried forward and set off under Sections 72(1), 73(2), 74(1) or 74A(3) unless such loss has been determined in pursuance of a return filed under Section 139.

14.2 The Amending Act has amended Section 80 of the Act to provide that such loss shall not be allowed to be carried forward and set off unless such loss is determined in pursuance of a return filed within the time allowed under Section 139(1) for furnishing a voluntary return of income or within such further time as may be allowed by the ITO.

14.3 The amendment takes effect from 1st April, 1985 and will, accordingly, apply in relation to any loss for asst. yr. 1985-86 and subsequent years. (Section 18 of the Amending Act).' We find that the position as clarified by the Board is based on the correct construction of the provisions. We also share the view that the amendment shall apply to loss arising in asst. yr. 1985-86 and not in the earlier years.

In the premises, the second question is answered in the negatived and in favour of the assessee."

13. Once Hon'ble jurisdictional High Court puts its seal of approval on the above extracted "position as clarified by the Board" as being "based on the correct construction of the provisions" and observes that Their Lordships "share the view that the amendment shall apply to loss arising in asst. yr, 1985-86 (onwards)", this Tribunal, in my considered view, is duty-bound to respectfully follow that position.

14. Since this aspect of the matter has also been referred to in some decisions cited by the assessee, I may also mentioned that by way of Taxation Laws (Amendment) Act, 1986, and effective 1st April, 1987, amendment has been made in Section 139(3) to provide for the specific date by which loss return should be filed and, thereby, withdrawing powers of the AO to extend, in his discretion, the time for furnishing return of loss. I consider it desirable to reproduce the relevant extracts from para 9.1 of CBDT Circular No. 469, dt. 23rd Sept., 1986, to mention the implication of this amendment :

"Providing the date by which a return showing loss is to be furnished and treatment of returns below taxable limit 9.1 Under the existing provisions of Section 139(3) of the IT Act, as amended by the Taxation Laws (Amendment) Act, 1970, the ITO, on an application made to him for this purpose, is empowered to extend, in his discretion, the time for furnishing a return of loss. By the Amending Act, this power of the ITO has been withdrawn. Accordingly, as per the amended provision, if the assessee is to get a benefit of the determination of the loss or any part thereof and for its carry forward under Section 72(1) or Section 73(2) or Section 74(1) or Section 74A(3) of the IT Act, he should file the return voluntarily within the period specified in Section 139(1) or by the 31st day of July of the assessment year relevant to the previous year during which the loss was sustained......[remaining portion of this paragraph is not relevant as it pertains to the amendment in Section 139(10)].

9.2 The above amendments shall come into force from 1st April, 1987, and will, accordingly, apply to the asst. yr. 1987-88 and subsequent years."

15. In my consider view, the above amendment is not relevant to the controversy in appeal before us because in the present case, it is an undisputed position that the assessee did not seek any extension of time for filing of income-tax returns. In this view of the matter and bearing in mind Hon'ble jurisdictional High Court's observation to the effect that observes that Their Lordships "share the view that the amendment shall apply to loss arising in asst. yr. 1985-86 (onwards)...", I am of the view that the CIT(A) was justified in declining assessee's contention that, despite the amendment in Section 80 w.e.f. 1st April, 1985, the loss on belated returns should be allowed to be carried forward for the asst. yrs. 1985-86 and 1986-87 as well.

16. I now turn to the judicial precedents relied upon by the assessee.

17. As far as Hon'ble jurisdictional High Court's judgment in the case of CIT v. Bangabasi Theatres (P) Ltd. (1993) 71 Taxman 408 (Cal) is concerned, it may be mentioned that, in this case, Their Lordships were in seisin of the asst. yr. 1984-85 and, in view of the discussions in paras 11 to 13 above, it is an undisputed position that the amendment in law requiring the assessee to file the income-tax returns within the time-limit laid down under Section 139(1), in order to avail the benefit of carry forward of losses, came into force w.e.f. 1985-86. The issue before Their Lordships was, therefore, not relevant to the controversy in appeals before us. No doubt the Hon'ble High Court has mentioned that "the changes made in 1986 which will come into force on and from the asst. yr. 1987-88 will not take out the asst. yr. 1984-85 from the ambit of decision in Presidency Medical Centre (P) Ltd.'s case (supra) [Presidency Medical Centre (P) Ltd v. CIT (1977) 108 ITR 838 (Cal)) but then, as discussed in paras 14 and 15 earlier in this order, this amendment is not relevant in the present context. In any event, judgment dt. 31st March, 1993, of the jurisdictional High Court, as against judgment dt. 7th Nov., 1990, in this case, has supported the stand of the Revenue as discussed in paras 11 to 13 earlier in this order. Since number of Hon'ble Judges in both the High Court Benches is equal, and in conformity with the settled law, later decision will prevail. The assessee thus, derives no benefit from the case of Bangabhasi Theatres (P) Ltd. (supra).

18. In the case of Presidency Medical Centre (P) Ltd. v. CIT (supra), the issue before the Hon'ble jurisdictional High Court was dealing with the asst. yr. 1964-65 and the issue before Their Lordships related to AO's declining to carry forward the loss on the ground that "as notice under Section 139(2) was not served and the return showing loss was not filed within the time allowed under Section 139 of the IT Act, 1961." Their Lordships of Hon'ble jurisdictional High Court, in this case, followed the decision of the Hon'ble Supreme Court in the case of CIT v. Kulu Valley Transport Co. (P) Ltd. (1970) 77 ITR 518 (SC) which primarily dealt with the interpretation of Section 22(2A) of the 1922 Act, which is materially identical to Section 139(3) of 1961 Act, and which broadly proceeded on the reasoning that Section 139(4) should be read as proviso to Section 139(1) and that a compliance to the provisions of Section 139(4) should be treated as compliance with Section 139(1). In other words, a return filed under Section 139(4) should also be treated as a return validly filed under Section 139 and the carry forward of loss should accordingly be allowed. I may mention that the majority judgment by Hon'ble Supreme Court rejected the objection of Shah J. the dissenting Judge, that the aforesaid reasoning would render Section 139(3) otiose. The majority judgment in this case, inter alia, read as follows :

"Now, the question which was submitted for the opinion of the High Court in the present case, consisted of two parts, viz., (1) whether the loss returned by the assessee for the assessment years in question was required in law to be determined by the ITO, and (2) whether those losses could be carried forward after being set off under Section 24(2) of the Act. The first part of the question stood concluded by the decision of this Court in Ranchhoddas Karsondas' case (supra). The ITO could not have ignored the return and had to determine those losses. Section 24(2) confers the benefit of losses being set off and carried forward and there is no provision in Section 22 under which losses have to be determined for the purpose of Section 24(2). The question which immediately arises is, whether Section 22(2A) places any limitation on that right, [emphasis supplied by me, by underlining italicised in print, and to highlight its contrast with the applicable legal position under Section 80 of 1961 Act whereby right to carry forward is restricted to the returns filed under Sub-section (1) of Section 139.] This sub-section which has been reproduced before simply says that in order to get the benefit of Section 24(2) the assessee must submit his loss return within the time specified by Section 22(1). That provision must be read with Section 22(3) for the purpose of determining the time within which return has to be submitted. It" can well be said that Section 22(3) is merely a proviso to Section 22(1). Thus, a return submitted at anytime before the assessment is made is valid return. In considering whether a return made is within time Sub-section (1) of Section 22 must be read along with Sub-section (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in Section 22(3). In other words, if Section 22(3) is complied with, Section 22(1) also must be held to have been complied with. If compliance has been made with the latter provision the requirements of Section 22(2A) would stand satisfied."

19. The proposition thus adopted was that a return of loss could be filed at any time within the time-limit laid down under Section 139(4) and yet, notwithstanding the provisions of Section 139(3), the assessee will be entitled for the benefit of carry forward of losses in the income-tax returns so filed. The assessment years in Kulu Valley Transport Co. (P) Ltd.'s case (supra) and in Presidency Medical Centre (P) Ltd. (supra), however, were 1954-55 and 1964-65, respectively. Those were the, years in which Section 80 was not in force in the form in which it was in force in the relevant assessment year.

20. I may also mention that Section 80, as it stood at the relevant point of time, provided as follows :

"Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed, within the time allowed under Sub-section (1) of Section 139 or within such further time as may be allowed by the ITO shall be carried forward and set off under Sub-section (1) of Section 72 or Sub-section (2) of Section 73 or Sub-section (1) of Section 74."

21. The expression "time allowed under Sub-section (1) of Section 139 or within such further time as may be allowed by the ITO" in the aforesaid provision was, by the virtue of Direct Tax Laws (Amendment) Act, 1987, and w.e.f. 1st April, 1989, substituted by the expression "in accordance with the provisions of Sub-section (3) of Section 139". Prima facie a view, therefore, seems possible that it is only w.e.f. 1st April, 1989, that returns filed under Section 139(4) will not be eligible for the benefit of carry forward of losses, since, the returns under Section 139(4), upto that point of time, could be treated as returns validly filed under Section 139 and, consequently, the same shall be eligible for carry forward in terms of the provisions of Section 80 of the Act, as it stood at that point of time. It will, however, be fallacious inasmuch as the Hon'ble Supreme Court, in Kulu Valley Transport Co. (P) Ltd.'s case (supra) were dealing with only the provisions of Section 22(2A) of 1922 Act, which are in pari materia with the provisions of Section 139(3) of the 1961 Act, and there were no restrictions, as in Section 80 now, on assessee's right to carry forward of losses. It may further be noticed that even the expression "time allowed under Sub-section (1) of Section 139 or within such further time as may be allowed by the ITO" was brought on the statute book w.e.f. 1st April, 1985, vide Taxation Laws (Amendment) Act, 1984, and it substituted the expression 'return filed under Section 139'. The legal provisions applicable w.e.f. 1st April, 1985, were, thus, neither in pari materia with the law under the 1922 Act, or the law under the 1961 Act till the point of time when this amendment in Section 80 came in force. I am of the considered view that Their Lordships of Hon'ble Supreme Court, in the case of Kulu Valley Transport Co. (P) Ltd. (supra), and Their Lordships of Hon'ble Calcutta High Court, in the case of Presidency Medical Centre (P) Ltd. (supra), were dealing with the legal provisions which are not in pan materia with the legal position, after amendment in Section 80 of 1961 Act by Taxation Laws (Amendment) Act, 1984, w.e.f. 1st, April, 1985, and, accordingly, these judgments have no application on the issue in appeal before us.

22. While dealing with the pre-amendment law and referring to the Hon'ble Supreme Court's judgment in the case of Kulu Valley Transport Co. (P) Ltd (supra), Sampat Iyengar's Commentary on the Income-tax Law (7th Edition, 1983 (1985 Reprint) at p. 2557) observes that "the decision of minority (sic) will govern and be applicable even under the 1961 Act, as the provisions of Section 139 are materially identical with these of Section 22 of the 1922 Act and as, further, there is nothing in the language of Section 80 to lead to a different conclusion" (emphasis supplied, italicised in print, by me by underlining), However, once the amendment is brought about in Section 80 and this amendment substitutes 'return filed under Section 139' with "return filed, within the time allowed under Sub-section (1) of Section 139 or within such further time as may be allowed by the ITO", the situation is not the same inasmuch as Section 80 now specifically provides that in order to avail the benefit of carry forward of loss, the relevant return must be filed within time allowed under Section 139(1) or within extended time allowed by the ITO.

23. Section 22(2A) of the . 1922 Act, scope of which was subject-matter of consideration before the Hon'ble Supreme Court in Kulu Valley's case, provided as follows :

"If any person, who has not been served with a notice under Sub-section (2) has sustained a loss of profits or gains in any year under the head 'Profits and gains of business, profession or vocation', and such loss or any part thereof would ordinarily have been carried forward under Sub-section (2) of Section 24, he shall, if he is to be entitled to the benefit of the carry forward of loss in any subsequent assessment, furnish within the time specified in the general notice given under Sub-section (1) or within such further time as the ITO in any case may allow, all the particulars required under the prescribed form of return of total income.....in the same manner as he would have furnished a return under Sub-section (1) had his income exceeded the maximum amount not liable to income-tax in his case, and all the provisions of this Act shall apply as if it were a return under Sub-section (1)."

24. The aforesaid provisions of 1922 Act are in pari materia with the provisions of Section 139(3) as it stood at the relevant point of time and which, for the sake of read reference, is reproduced below :

"If any person, who has not been served with a notice under Sub-section (2) has sustained a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under Sub-section (1) of Section 72 or Sub-section (2) of Section 73, or Sub-section (1) of Section 74, or Sub-section (3) of Section 74A, he may furnish, within the time allowed under Sub-section (1) or within such further time which, on an application made in the prescribed manner, the ITO may, in his discretion allow, a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under Sub-section (1),"

25. The implications of Section 22(2A) of the 1922 Act and of Section 139(3) of the 1961 Act being identical, and restriction on carry forward of losses under Section 80 restricted to rather broad category of 'returns filed under Section 139', the observations of Their Lordships in the context of Section 2(22A) continued to be valid, with respect to returns filed under Section 139(4), till the amendment in Section 80 was brought about w.e.f. 1st April, 1985. The case before the Hon'ble Calcutta High Court in Presidency Medical Centre (P) Ltd. (supra), being for the asst. yr. 1964-65, was also of pre-amended Section 80 (assessment years earlier than 1985-86) and, therefore, the restriction brought in force in Section 80, to allow carry forward of losses only for returns filed under Section 139(1) as against the return filed in any of the sub-sections of Section 139 till that point of time, had not come to be effective. As far as Kulu Valley Transport Co. (P) Ltd.'s case (supra) is concerned, the provisions regarding restrictions on assessee's right to carry forward the losses, as envisaged in Section 80 of 1961 Act, were not in force anyway. In this view of the matter, and for the elaborate reasons set out above, I am of the considered view that the assessee derives no benefit from these judgments.

26. The assessee's reliance on the judgment of Hon'ble MP High Court, in the case of CIT v. Dogar Tools (P) Ltd. (1998) 232 ITR 616 (MP) is also not legally sustainable, in view of the fact that Hon'ble jurisdictional High Court, in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. v. CIT (supra), has held that the amendment in Section 80, restricting the right of carry forward of losses to the cases wherein returns are filed within time-limit allowed under Section 139(1) or such extended time as may be allowed by the ITO, shall apply to loss arising in asst. yr. 1985-86 onwards. Once Hon'ble jurisdictional High Court takes a view, even in conflict with the esteemed views of any non-jurisdictional High Court, it is no longer open to the Tribunal to take any other view of the matter than the one taken by the Hon'ble jurisdictional High Court. We are, therefore, unable to subscribe to the proposition thus advanced by the Hon'ble M.P. High Court that "the decision of Hon'ble Supreme Court in the case of CIT v. Kulu Transport Co. (P) Ltd. (supra) was good law till the asst. yr. 1988-89". In any event, since w.e.f. 1st April, 1985, amended Section 80 of the 1961 Act restricted the right of carry forward of losses to the cases where income-tax return was filed within time allowed under Section 139(1) or within such extended time, as ITO may have allowed, and since the Hon'ble Supreme Court had allowed the carry forward of losses in case of belated returns since no statutory provision then existing "places any limitation on that right" of carry forward of losses in case of belated returns. The issue in that judgment was confined to the interpretation of Section 22(2A) of the 1922 Act which is broadly in pari materia with Section 139(3) of the 1961 Act. It would thus appear, in harmony with the views expressed by Hon'ble jurisdictional High Court, that, strictly speaking, Hon'ble Supreme Court's judgment in the case of Kulu Valley Transport Co. (P) Ltd. (supra) may not be applicable after the amendment in Section 80, by the virtue of Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985.

27. As for the decisions by the co-ordinate and SMC Bench of the Tribunal, I may only add that since I have arrived at my conclusions in the light of the judgment of the Hon'ble jurisdictional High Court, and for the detailed reasons as aforesaid, I do not see any reasons to be dissuadded from my views expressed above. In any event, none of the decisions specifically deals with the reasons set out above. These decisions only rely upon the judgments in the case of Presidency Medical Centre (P) Ltd. (supra) and CBDT Circular No. 469 (supra) which, for the elaborate reasons set out above, are not applicable on the facts of this case.

28. Accordingly, in my view, CIT(A) was justified in holding that AO rightly declined carry forward of losses of Rs. 1,03,17,30,191 for the asst, yr. 1986-87 and of Rs. 76,46,98,933 for the asst. yr. 1985-86.

29. In the result, appeals are dismissed.

REFERENCE under Section 255(4) OF THE IT ACT, 1961 20th Aug., 2002 As there is a difference of opinion between the JM and the AM, the matter is being referred to the Hon'ble President of Tribunal with a request that the following question may be referred to a Third Member or pass such orders as the Hon'ble President may kindly decide :

"Whether, on the facts and in the circumstances of the case, the Tribunal should have allowed carry forward of the loss aggregating to Rs. 179.64 crores, for asst. yrs. 1985-86 and 1986-87 or the Tribunal should have declined the carry forward of the aforesaid losses of Rs. 179.64 crores in view of amendment in Section 80 w.e.f. 1st April, 1985, and in view of the fact that income-tax returns were filed beyond the time-limit allowed under Section 139(1) ?"

M.A. Bakhshi, Vice-President

1. The appeals of the assessee for the asst. yrs. 1985-86 and 1986-87 were heard by "C" Bench of the Tribunal and as a result of difference of opinion amongst the learned Members of the Bench, the Hon'ble President has nominated me as Third Member under Section 255(4) of the IT Act, 1961, for decision in regard to the following point of dispute :

"Whether, on the facts and in the circumstances of the case, the Tribunal should have allowed carry forward of the loss aggregating to Rs. 179.64 crores, for asst. yr. 1985-86 and 1986-87 or the Tribunal should have declined the carry forward of the aforesaid losses of Rs. 179.64 crores in view of the amendment in Section 80 w.e.f. 1st April, 1985, and in view of the fact that income-tax returns were filed beyond the time-limit allowed under Section 139(1)?"

2. Parties have been heard and records perused. The relevant facts relating to the issue involved in these appeals may be stated even at the cost of repetition for the sake of coherence and convenience. For asst. yr. 1985-86, the return of income was filed by the assessee on 14th Oct., 1985, declaring income of Rs. 5,14,82,950. The assessee had sought extension of time upto 30th Sept., 1985. Thus, the return of income filed by the assessee was beyond time allowed under Section 139(1) either originally or on extension by the AO. Similarly, the return of income for asst. yr. 1986-87 was filed on 30th Oct., 1987, declaring income of Rs. 3,93,67,310. The assessee had filed Form No. 6 seeking extension of time upto 31st Dec., 1986, and subsequently upto 31st March, 1987. The AO had allowed the extension of time for filing of the return upto 31st Dec., 1986, and the decision on extension application had been communicated to the assessee vide letter dt. 30th Dec., 1986, served on 12th Jan., 1987. Thus, the return filed by the assessee for asst. yr. 1986-87 was beyond the prescribed time under Sectionl39(1) either originally or on extension by the AO. Thus, the admitted fact is that the income-tax returns for asst. yrs. 1985-86 and 1986-87 were filed beyond the time allowed under Section 139(1) originally or on extension by the AO. So, however, it is also not disputed that both the returns filed by the assessee for the aforementioned assessment years were within the time allowed under Section 139(4) of the IT Act, 1961.

3. The AO completed the assessment of the assessee-company on 22nd Sept, 1992, for asst. yr. 1985-86 at an income of Rs. 52,80,30,490 against which the assessee had filed an appeal before the CIT(A) and subsequently to the Tribunal. Before the Tribunal, assessee claimed certain receipts, offered for taxation in its returns, as non-taxable. The Tribunal in its consolidated order dt. 31st Jan., 1995, in ITA Nos. 1275 & 1276/Cal/1993 for asst. yrs 1985-86 and 1986-87 allowed the claim of the assessee. Accordingly, the AO gave effect to the order of the Tribunal as a result of which a net loss of Rs. 1,03,17,30,191 was determined for asst. yr. 1985-86.

4. Similarly for asst. yr. 1986-87, the AO had made an assessment under Section 143(3) vide order dt. 24th Sept., 1992, determining income of Rs. 41,57,26,060. Subsequently as a result of appellate orders of the CIT(A) and the Tribunal (supra), the loss of Rs. 76,46,98,933 was determined by the AO while giving effect to the order of the Tribunal.

5. While giving effect to the appellate orders, the AO denied the benefit of carry forward of loss on the ground of 'late submission of the income-tax returns'. Section 80 of the IT Act, 1961 has been invoked.

6. It may not be out of place to mention that the orders of the Tribunal have not become final as the reference has been directed by the Hon'ble Supreme Court to be made to the Hon'ble Calcutta High Court on the questions of law arising out of the order of the Tribunal.

7. The assessee had appealed to the CIT(A) against the appeal-effect order of the AO. However, the CIT(A) vide his order dt. 16th Dec., 1998, held that since the returns filed by the assessee-company were belated and there was no evidence brought on record to show that the assessee-company sought extension of time for filing of the returns for asst. yrs. 1985-86 and 1986-87, it was not entitled to the benefit of carry forward the business loss for any of the two years. Whereas the observation of the CIT(A) that extension of time had not been sought by the assessee is contrary to the observations of the AO in the assessment order, yet undisputed fact remains that the returns filed by the assessee for asst. yrs. 1985-86 and 1986-87 were beyond the time allowed under Section 139(1) either originally or on extension. The assessee appealed to the Tribunal and the appeals were initially heard by a Division Bench, i.e., "C" Bench of the Tribunal, Kolkata. The learned JM decided the issue in favour of the assessee relying upon the decisions of the Calcutta High Court in the case of CIT v. Bangabasi Theatres (P) Ltd. (1993) 72 Taxman 408 (Cal), in Presidency Medical Centre (P) Ltd. v. CIT (1977) 108 ITR 838 (Cal), and Madhya Pradesh High Court in the case of CIT v. Dogar Tools (P) Ltd. (1998) 232 ITR 616 (MP). Reliance has also been placed on the decisions of the Tribunal in the case of United Dairies (P) Ltd. v. ITO [ITA No. 195/(Del/90, order dt. 31st March, 1998) and in the case of Regent Estates Ltd. v. ITO [ITA No. 2045/Cal/1988, order dt. 29th June, 1989).

8. However, the learned AM has expressed a divergent view. He has relied upon the decision of the Calcutta High Court in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. v. CIT (1993) 204 ITR 23 (Cal) as also on the circular of the CBDT No. 397, dt. 16th Oct., 1984, and Instructions No. 1607, dt. 14th March, 1985, as well as to the amendment made in Section 80 of the IT Act, 1961, by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985. The learned AM has expressed the view that the subsequent judgment of the jurisdictional High Court dt. 31st March, 1993, in Krishna Chandra Dutta (Cookme)'s case (supra) was to be followed in preference to the earlier judgment in Bangabasi Theatres (P) Ltd.'s case relied upon by the learned JM. It has also been observed by the learned AM that the relevant provisions applicable from 1st April, 1985, are not in parai materia with the provisions of law under 1922 Act. It has further been held that the decision of the Supreme Court in the case of CIT v. Kulu Valley Transport Co. (P) Ltd. (1970) 77 ITR 518 (SC) is not applicable in this case in view of the amendment in Section 80 of the IT Act, 1961, by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985. In regard to the decision of the Madhya Pradesh High Court in the case of CIT v. Dogar Tools (P) Ltd. (supra), it has been pointed out that the said decision is inapplicable in view of the decision of the jurisdictional High Court in Krishna Chandra Dutta (Cookme) (P) Ltd.'s case (supra). It has further been observed that Circular No. 469, dt. 23rd Sept., 1986, of the CBDT was irrelevant.

9. The learned counsel for the assessee contended that Section 22 of the IT Act, 1922, substantially corresponds to Section 139 of the IT Act, 1961, as it stood at all material time. Sub-section (2A) of Section 22 of the 1922 Act corresponds to Section 139(3) of 1961 Act. Sub-section (3) of Section 22 of 1922 Act corresponds to Sub-sections (4) and (5) of Section 139 to 1961 Act, According to the learned counsel, Section 80 to 1961 Act contains the very same provision which was earlier contained in Sub-section (2A) of 1922 Act. Sub-section (2) of 1922 Act corresponds to Section 139(3) of 1961 Act. The learned counsel for the assessee contended that the provisions of Section 139(3) being in pari materia with Sub-section (2A) of Section 22 of 1922 Act, the decision of the Supreme Court in the case of CIT v. Kulu Valley Transport Co. Ltd. (supra) is clearly applicable to the facts of this case. It was contended that Sub-section (2A) of Section 22 of 1922 Act came up for judicial interpretation before the Hon'ble Supreme. Court in the aforementioned case and the question before the apex Court was whether an assessee who files belated returns of loss beyond the time specified in the general notice under Sub-section (1) of Section 139 of 1961 Act or within such further time as extended by the ITO for filing the return, could lawfully claim as loss suffered by him to be determined and carried forward notwithstanding the fact that the assessee has not complied with the requirement of Sub-section (2A) of Section 22 of 1922 Act. The learned counsel further contended that Sub-section (3) of Section 22 of 1922 Act is also in pari materia with the provisions of Sub-section (4) of Section 139 r/w s 80 of the IT Act, 1961. According to the learned counsel, Section 80 of 1961 Act only reiterates what is already set out as a condition in Section 139(3) of the 1961 Act. Accordingly to the learned counsel, Section 139(4) being a section latter in the statute book both to Section 80 and Section 139(3) of 1961 Act, the same would prevail.

10. Relying upon the decision of the Supreme Court in the case of Banarsi Devi & Am. v. ITO (1964) 53 ITR 100 (SO) at p. 106, it was contended that where a word or phrase has received a clear judicial interpretation, the subsequent statute which incorporates the same word or phrase in a similar context, must be construed in a manner that the word or phrase is interpreted according to the meaning that has previously been assigned to it. It is the claim of the learned counsel that Section 80 after its amendment w.e.f. 1st April, 1985 and provisions of Section 139(3) and Section 139(4) echo the similar provisions considered by the Hon'ble Supreme Court under the 1922 Act in the case of Kulu Valley Transport Co. Ltd. (supra). According to the learned counsel, the GBDT Circular No. 397, dt. 16th Oct., 1987, Instructions No. 1528, dt. 20th Sept., 1983 and Instructions No. 1607, dt. 14th March, 1985, the Board having expressed the minority view taken by Mr. Justice Shah in Kulu Valley Transport Co. Ltd.'s case (supra) is, therefore, not acceptable. Accordingly to the learned counsel, the CBDT circulars/instructions are binding upon the tax authorities and may be given effect by the Tribunal and the Courts only if these are benevolent in nature. Reliance was placed on the decision of the Supreme Court in the case of Keshavji Ravji & Co. v. CIT in support of the contention that the circulars of the Board are binding upon the income-tax authorities, but the same cannot bind the Tribunals or the High Courts. It was contended that the circulars or instructions of CBDT contrary to the interpretation given by the apex Court are not binding. Relying upon the decisions of the Supreme Court in the case of N.N. Bhagwati v. CIT (2001) 247 ITR 206 (SC) and Hindustan Aeronautics Ltd. v. CIT (2000) 243 ITR 808 (SC), it was contended that the Tribunal is not empowered to direct that a circular should be given effect to in preference to the decision of the Hon'ble Supreme Court. It was further contended that the Hon'ble Calcutta High Court in Presidency Medical Centre (P) Ltd. v. CIT (supra) held that the principles laid down by the apex Court in the case of Kulu Valley Transport Co. Ltd. (supra) delivered that reference to provisions of 1922 Act was equally applicable under the 1961 Act, more particularly because even under Section 139(4) of 1961 Act a return could be filed by an assessee at any time before the assessment is made. The learned counsel further pointed out that admittedly in the case of Presidency Medical Centre (P) Ltd. (supra), the assessment year involved is 1964-65. So, -however, the amendment in Section 80 of 1961 Act w.e.f. 1st April, 1985, merely echoes and reiterates what was earlier contained in Sub-section (2A) of Section 22 of 1922 Act as well as what is contained in Sub-section (3) of Section 139 of 1961 Act. According to the learned counsel, no additional condition was sought to be imposed in the 1961, Act over and above what was already contained in Section 22(2A) of the 1922 Act. It was, accordingly, contended that the law relating to asst. yrs. 1985-86 and 1986-87 in regard to set off and carry forward of losses was no different than for asst. yrs. 1962-63 to 1984-85 of under the 1961 Act and/or any assessment year under the 1922 Act. Referring to the decision of the Hon'ble Calcutta High Court in the case of CIT v. Bangabasi Theatres (P) Ltd. (supra), it was contended that the view canvassed by the appellant has been accepted by the Hon'ble High Court in the aforementioned case. It was pointed out that in that decision the Hon'ble High Court held that changes made in 1986 will come into force from 1987-88. Reliance was also placed on the decision of the Tribunal in the case of United Dairies (P) Ltd. v. ITO (supra) where a view on similar issue has been taken in favour of the assessee. Reliance has also been placed on the decision of the Madhya Pradesh High Court in the case of CIT v. Dogar Tools (P) Ltd. (supra). Further, the decision of the Hon'ble Calcutta High Court in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. v. CIT (supra) is sought to be distinguished on the ground that the Hon'ble High Court had decided the issue relating to asst. yr. 1983-84 and, therefore, the view expressed by their Lordships in regard to an issue which was not before the Hon'ble High Court is in the nature of sub silentio and not binding. In this regard reliance has been placed on the decisions of the Supreme Court in the case of Municipal Corporation of Delhi v. Gurnam Kaur (1989) 1 SCC 101 and Director of Settlements, A.P. and Ors. v. M.R. Apparao & Am. (2002) 4 SCC 638. The learned counsel further contended that the decision in the case of Presidency Medical Centre (P) Ltd. (supra) was the solitary decision cited before the D-Bench and the said decision is based on the decision of the Supreme Court in the case of Kulu Valley Transport Co. Ltd. (supra). It was, accordingly, pleaded that the issue may be decided in favour of the assessee.

11. The learned Departmental Representative, on the other hand, contended that the decision of the Hon'ble Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra) is based on the provisions of the 1922 Act and since the law had been amended w.e.f. 1st April, 1985, the Tribunal is bound to take into account the law as it existed on the 1st day of the assessment year. Reliance has been placed on the decision of the Supreme Court in the case of Reliance Jute & Industries Ltd. v. CIT (1979) 120 ITR 921 (SC) and the decision of the Bombay High Court in the case of CIT v. Orkay Silk Mitts (P) Ltd. (1998) 230 ITR 108 (Bom) in support of the proposition of law canvassed on behalf of the assessee. The learned Departmental Representative further contended that Section 139 and Section 80 of 1961 Act have got to be read together and not in a disjointed manner. It was contended that this is a basic tenet of harmonious construction. Reliance has been placed on the. decisions of the Supreme Court in the case of CIT v. Sardar Arjun Singh Ahluwalia (1999) 240 ITR 693 (SC) and Calcutta High Court in the case of CIT v. Smt. Anita Ghosh (1993) 202 ITR 991 (Cal) and that of Kerala High Court in the case of CIT v. Parekh Brothers (2002) 253 ITR 43 (Ker). It was further contended that Section 80 of IT Act, 1961, as amended w.e.f. 1st April, 1985, cannot be ignored. Relying upon the decision of the Supreme Court in the case of CIT v. Distributors (Baroda) (P) Ltd. (1972) 83 ITR 377 (SC), it was contended--"No part of a provision of a statute can be just ignored by saying that the legislature eancted it not knowing what it was saying." Relying upon the decision of the Supreme Court in the case of CIT v. Kripashankar Daya Shanker Worah (1971) 81 ITR 763 (SC), it was contended that if the intention of the legislature is clear and beyond doubt, then the fact that the provision could have been more artistically drafted cannot be a ground for treating any part of a provision as otiose. In regard to the decisions cited on behalf of the assessee, the learned Departmental Representative contended that in the aforementioned decisions the relevant provisions applicable for asst. yrs. 1985-86 and 1986-87 were not under consideration of the Hon'ble High Courts. It was pointed out that the Hon'ble Calcutta High Court has specifically mentioned in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. (supra) that "the amendment to Section 80 was effective from 1st April, 1985, requiring a return of loss to be filed under Section 139(1) as a prerequisite for determination of loss for the purpose of carry forward and set off". It was pointed out that even the obiter dicta in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. is relevant in this case as there is no ratio decidendi of the jurisdictional High Court available in any other case. The decisions of the Tribunal cited on behalf of the assessee are claimed to be inapplicable to the facts of the case insofar as the relevant provisions of the Act and the relevant decisions have not been taken into consideration. Placing reliance on the CBDT circulars explaining the purpose of amending the provisions of Section 80 of the IT "Act, 1961, it was contended that the explanatory notes to the Amending Acts are Of contemporaneous value and not just executive instructions extending or withdrawing a benefit. In this connection reliance was placed on the, decision of the Supreme Court in the case of K.P. Varghese v. ITO and Anr. (1981) 131 ITR 597 (SC). It was further contended that the decision of the Madhya Pradesh High Court in the case of CIT v. Dogai Tools (P) Ltd. (supra) is not to be followed as held by their Lordships of the Mysore High Court in the case of Dr. T.P. Tapadia v. CIT (1973) 87 ITR 511 (Mys), wherein it has been held that the Tribunal should not follow a decision of a different High Court where there is a specific circular of the Board to the contrary. The learned Departmental Representative also relied upon the decision of the Tribunal in favour of the Revenue in the case of Asstt. CIT v. MX Chatterjee [ITA No. 213/Cal/98, order dt. 27th Sept., 2002]. Reliance was also placed on the Kerala High Court decision in the case of CIT v. Smt. Gunavathy Dharamsy (2000) 241 ITR 168 (Ker). It was further pointed out that the decision of the Kerala High Court in the case of Smt Gunavathy Dharamsy (supra) has been followed by the same High Court in the case of CIT v. Rajesh Kumar (2002) 125 Taxman 834 (Ker). The learned Departmental Representative has also placed reliance on the decision of the Calcutta High Court in the case of Koppind (P) Ltd. v. CIT (1994) 207 ITR 228 (Cal) where their Lordships of the High Court have dealt with the carry forward of loss in the return filed under Section 148. But on analysing the relevant provisions of the Act, their Lordships held particularly in the context of amended provisions that Section 80 which, w.e.f. 1st April, 1985, completely prohibits determination of loss and its carry forward and set off except where the return is (sic-not) filed either under Section 139(2) or Section 139(1) of the 1961 Act, According to the learned Departmental Representative, the decision of the Supreme Court in the case of Kulu Valley Transport Co. Ltd. (supra) has been considered in the aforementioned decision of Koppind (P) Ltd. (supra). It was, accordingly, pleaded that the appeal of the assessee may be dismissed.

12. I have perused the records, given my careful consideration to the rival contentions advanced on behalf of the parties and have also taken into consideration the views expressed by the learned AM and the learned JM.

13. I first propose to consider the main contentions advanced on behalf of the parties as to whether the principle laid down by the Supreme Court in the case of Kulu Valley Transport Co. Ltd. (supra) is applicable in this case even after the amendment of Section 80 of the IT Act, 1961, w.e.f. 1st April, 1985.

14. In the case of Kulu VaRey Transport Co. Ltd. (supra), the assessee had filed the returns disclosing loss for asst. yrs. 1953-54 and 1954-55 in January, 1956 and the question that arose for consideration of the Hon'ble Supreme Court was "whether the loss had to be determined and carried forward under Section 24(2) of the IT Act, 1922, though the returns were not filed within the time specified in the general notice under Section 22(1) and the time for filing the return had not been extended by the ITO. Notice under Section 22(2) had also not been served upon the assessee." Their Lordships of the Supreme Court, by a majority judgment, decided the issue in favour of the assessee. Hon'ble Justice Hegde and Justice Grover (Justice Shah dissenting) held that since Section 22(3) of 1922 Act allowed the assessee to file a return before the assessment was made, the condition for set off and carry forward under Section 22(2A) of the 1922 Act was ineffective in so far as Sub-section (3) of Section 22 of the said Act permitted an assessee to file a return at any time within the specified period. In my view, if the above decision of the Hon'ble Supreme Court in the case of Kulu Valley Transport Co. Ltd. (supra) is applied blindly without going into the context in which the decision of the Supreme Court is founded, one may tend to believe that the said decision of the Hon'ble Supreme Court may be attracted in this case. However, it is well settled principle of law that the decision of the Court must be read in the context in which it has been rendered. In this connection, it would be relevant to refer to the observation of their Lordships of the Supreme Court in the case of CIT v. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC) as under :

"It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, Courts must carefully try to ascertain the true principle laid down by the decision."

15. Similarly, in the case of Director of Settlement, AP and Ors. v. M.R. Apparao and Anr. (supra), their Lordships of the Supreme Court held as under :

"Article 141 of the Constitution unequivocally indicates that the law declared by the Supreme Court shall be binding on all Courts within the territory of India. The aforesaid Article empowers the Supreme Court to declare the law. It is, therefore, an essential function of the Court to interpret a legislation. The statements of the Court on matters other than law like facts may have no binding force as the facts of two cases may not be similar. But what is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the Court that forms the ratio and not any particular word or sentence. To determine whether a decision has "declared law" it cannot be said to be a law when a point is disposed of on concession and what is binding is the principle underlying a decision. A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered. An "obiter dictum" as distinguished from a ratio decidendi is an observation by the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision. Such an obiter may not have a binding precedent as the observation was unnecessary for the decision pronounced, but even though an obiter may not have a binding effect as a precedent, but it cannot be denied that it is of considerable weight. The law which will be binding under Article 141 would, therefore, extend to all observations of points raised and decided by the Court in a given case. So far as constitutional matters are concerned, it is a practice of the Court not to make any pronouncement on points not directly raised for its decision. The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court (Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur (1970) 2 SCC 267 : AIR 1970 SC 1002 and AIR 1973 SC 794 (sic). When the Supreme Court decides a principle it would be the duty of the High Court or a subordinate Court to follow the decision of the Supreme Court. A judgment of the High Court which refused to follow the decision and directions of the Supreme Court or seeks to revive a decision of the High Court which had been set aside by the Supreme Court is a nullity [Narinder Singh v. Surjit Singh (1984) 2 SCC 402 and Kausalya Devo Bogra v. Land Acquisition Officer (1984) 2 SCC 324]."

16. In the light of the above principles of law it is important to find out the context in which decision of the Supreme Court in the case of Kulu Valley Transport Co. Ltd. (supra) has been rendered. In order to appreciate the context and the reasoning given by the Hon'ble Supreme Court in arriving at the decision in the case of Kulu Valley Transport Co. Ltd. (supra), the relevant portions of the judgment may be quoted hereunder :

"The assessee, Kullu Valley Transport Co. (P) Ltd., is a private company incorporated under the Indian Companies Act, 1913, having its registered office at Pathankot. In January, 1956, the company voluntarily filed returns under Section 22(3) of the IT Act, 1922, hereinafter called the "Act", showing losses of Rs. 1,51,520 and Rs. 48,977 for the asst. yrs. 1953-54 and 1954-55, respectively. No notice had been served on the company under Section 22(2) of the Act. The ITO held that since the returns had been filed after the statutory period the company was not entitled to carry forward the losses for both the years in the subsequent assessments. Before the AAC two main points were urged. The first was that the delay in the submission of the returns should have been condoned and, secondly, the returns should have been treated as having been made under Section 22(3) in which case also they would be valid returns under Section 22(2A) by reading Sub-sections (3) and (1) of Section 22 together. The AAC did not find any sufficient or reasonable cause for condoning the delay. On the second point he decided against the company. The Tribunal agreed with the view of the AAC and on the main point held that the company was not entitled to the benefit of carrying forward the losses as it had not filed the returns in accordance with Section 22(2A) of the Act.

Section 24(2) contains substantive provisions relating to carrying forward of the loss. It provides that where any assessee sustains a loss of profits or gains in any year being a previous year in any business, profession or vocation and the loss cannot be wholly set off under Sub-section (1) (of Section 24) so much of the loss as is not so set off or the whole loss where the assessee had no other head of income shall be carried forward to the following year. Sub-section (2A) of Section 22 was inserted by the IT (Amendment) Act, 1953, w.e.f. 1st April, 1952.

[Emphasis, italicised in print, supplied] ............Thus, the scheme of Section 22 is that a public or general notice is to be given every year by the ITO or he could even give an individual or special notice. But if a person has not furnished a return within the time allowed by or under the first two sub-sections of Section 22 he could furnish a return at any time before the assessment is made. It is well settled by now that a return can always be filed at any time before the assessment is made. The ITO has to make the assessment on that return and he could not choose to ignore. The question that immediately arises is whether, in case of a voluntary return in which loss has been shown and determined, the ITO can decline to give the benefit under Section 24(2) of carrying forward the loss on the ground that the assessee did not comply with the provisions of Section 22(2A) of the Act. In other words, when there is an express provision in that sub-section which must be availed of if the assessee is to be entitled to the benefit of carrying forward of loss in any subsequent assessment can he take advantage of the provisions of Section 22(3) and claim that since he has filed a voluntary return before any assessment has been made and, if it be determined that he has suffered a loss, he is entitled to carry forward that loss.

The argument on behalf of the assessee is that Section 24(2) confers the right to carry forward the loss to the following year provided the conditions contained in the sub-section are satisfied. There is no further requirement that has to be fulfilled so far as the substantive law is concerned. Section 22(2A) is merely a procedural provision and it also provides that once a return has been furnished in accordance therewith all the provisions of Act become applicable as if it were a return under Sub-section (1). That would attract Section 22(3) and, therefore, a voluntary return can be filed even after the period mentioned in Sub-section (2A) has expired so long as the assessment has not taken place. It is pointed out that, supposing a return is filed showing income but the ITO in the assessment proceedings holds that there has been loss and the assessee was mistaken in showing a profit, the assessee in such circumstances can certainly claim the benefit of Section 24(2). [Emphasis, italicised in print, supplied]. If that is possible, there is no reason or justification for holding that although he could claim the benefit of Section 24(2) by filing a voluntary return in the given illustration, he would be deprived of that benefit if he filed a return voluntarily showing a loss except in compliance with Section 22(2A). On the other hand, the contention on behalf of the Revenue is that Section 22 before its amendment in the year 1953 did not make any provision for the filing of a loss return voluntarily under Section 22(1) returns which were invited were only of taxable income. No return which in the opinion of the person making it was a loss return was intended to be filed under Section 22(1). It was only under Section 22(2) that the return that was required to be filed was in pursuance of the individual notice given by the ITO. Since by this notice a return in the prescribed form had to be filed by a person to whom the notice was issued whether it was profit or loss, a loss return could, therefore, be filed only in pursuance of a notice served under Section 22(2) but not voluntarily. It is by virtue of the provisions contained in Section 22(2A) that a loss return can be filed where a person has not been served under Sub-section (2) in order to get the benefit of the carrying forward of the loss under Section 24(2). This is indeed expressly provided by Sub-section (2A) of Section 22."

17. In order to appreciate the above decision of the Supreme Court, I consider it. necessary to refer to the relevant provisions of the IT Act, 1922 and the corresponding provisions under the IT Act, 1961. The relevant provisions considered by their Lordships of the Supreme Court in the case of Kulu Valley Transport Co. Ltd. (supra) are contained in Sections 22 and 24 of the IT Act, 1922 which are reproduced hereunder :

"Section 22--Return of income (1) The ITO shall, on or before the 1st day of May in each year, give notice, by publication in the press and by publication in the prescribed manner, requiring every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income-tax to furnish, within such period not being less than sixty days as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner, setting forth (along with such other particulars as may be required by the notice) his total income and total world income during that year :

Provided that the ITO may in his discretion extend the date for the delivery of the return in the case of any person or class of persons.

(2) In the case of any person whose total income is, in the ITO's opinion, of such an amount as to render such person liable to income-tax, the ITO may serve a notice upon him requiring him to furnish, within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income and total world income during the previous year :

Provided that the ITO may in his discretion extend the date for the delivery of the return.

(2A) If any person, who has not been served with a notice under Sub-section (2) has sustained a loss of profits or gains in any year under the head "Profits and gains of business, profession, or vocation", and such loss or any part thereof would ordinarily have been carried forward under Sub-section (2) of Section 24, he shall, if he is to be entitled to the benefit of the carry forward of loss in any subsequent assessment, furnish within the time specified in the general notice given under Sub-section (1) or within such further time as the ITO in any case may allow, all the particulars required under the prescribed form of return of total income and total world income in the same manner as he would have furnished a return under Sub-section (1) had his income exceeded the maximum amount not liable to income-tax in his case, and all the provisions of this Act shall apply as if it were a return under Sub-section (1).

(3) If any person has not furnished a return within the time allowed by or under Sub-section (1) or Sub-section (2), or having furnished a return under either of those subsections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made.

(4) The ITO may serve on any person who has made a return under Sub-section (1) or upon whom a notice has been served under Sub-section (2) a notice requiring Mm on a date to be therein specified to produce, or cause to be produced, such account or documents as the ITO may require, or to furnish in writing and verified in the prescribed manner information in such form and on such points or matters; (including, with the previous approval of the CIT, a statement of all assets and liabilities not included in the accounts) as the ITO may require for the purposes of this section :

Provided that the ITO shall not require the production of any accounts relating to a period more than three years prior to the previous year.

(5) The prescribed form of the return referred to in Sub-sections (1) and (2) shall, in the case of an assessee engaged in any business, profession or vocation, require him to furnish particulars of the location and style of the principal place wherein he carries on the business, profession or vocation and of any branches thereof, the names and addresses of his partners, if any, in such business, profession or vocation and the extent of the share of the assessee and the shares of all such partners in the profits of the business, profession or vocation and any branches thereof.

Section 24 : Set off of loss in computing aggregate income (1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year :

Provided that in computing the profits and gains chargeable under the head "Profits and gains of business, profession or vocation", any loss sustained in speculative transactions which are in the nature of a business shall not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions :

Provided further that where the assessee is an unregistered firm which has not been assessed under the provisions of Clause (b) of Sub-section (5) of Section 23, any such loss shall be set off only against the income, profits and gains of the firm and not against the income, profits and gains of any of the partners of the firm; and where the assessee is a registered firm, any loss which cannot be set off against other income, profits and gains of the firm shall be apportioned between the partners of the firm and they alone shall be entitled to have the amount of the loss set off under this section.

Explanation 1 : Where the speculative transactions carried on are of such a nature as to constitute a business, the business shall be deemed to be distinct and separate from any other business.

Explanation 2. : A speculative transaction means a transaction which a contract for purchase and sale of any commodity including stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scripts :

Provided that for the purposes of this section :

(a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or

(b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or

(c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; shall not be deemed to be a speculative transaction.

(2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, in any business, profession or vocation, and the loss cannot be wholly set off under -Sub-section (1), so much of the loss is not so set off or the whole loss where the assessee had no other head of income shall be carried forward to the following year, and

(i) where the loss was sustained by him in a business consisting of speculative transactions, it shall be set off only against the profits and gains, if any, of any business in speculative transactions carried on by him in that year;

(ii) where the loss was sustained by him in any other business, profession or vocation, it shall be set off against the profits and gains, if any, of any business, profession or vocation carried on by him in that year; provided that the business, profession or vocation in which the loss was originally sustained continued to be carried on by him in that year; and

(iii) if the loss in either case cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following year and so on, but no loss shall be so carved toward forward for more than eight years :

Provided that :

(a) (omitted by Act XLI of 1954)

(b) where depreciation allowance is under Clause (b) of the proviso to Clause (vi) of Sub-section (2) of Section 10, also to be carried forward, effect shall first be given to the provisions of this sub-section;

(c) nothing herein contained shall entitle any assessee, being a registered firm, to have carried forward and set off any loss which has been apportioned between the partners, under the proviso to Sub-section (1), or entitle any assessee, being a partner in an "unregistered firm which has not been assessed under the provisions of Clause (b) of Sub-section (5) of Section 23, to have carried forward and set off against his own income any loss sustained by the firm;

(d) where an unregistered firm is assessed under Clause (b) of Sub-section (5) of Section 23, during any year, its losses shall also be carried forward and set off under this section as if it were a registered firm;

(e) where a change has occurred in the constitution of a firm, nothing in this section shall be deemed to entitle the firm to have set off so much of the loss proportionate to the share of a retired or deceased partner computed in accordance with the provisions of Clause (b) of Sub-section (1) of Section 16 as exceeds his share of profits, if any, of the previous year in the firm, or to entitle any partner to the benefit of any portion of the said loss which is not apportionable to him under the said Clause (b), and where any person carrying on any business, profession or vocation has been succeeded in such capacity by another person, otherwise than by inheritance, nothing in this section shall be deemed to entitle any person other than the person incurring the loss to have it set off against his income, profits or gains;

(f) A loss arising in the previous years for the assessment for the years ending on the 31st day of March of the years 1940, 1941, 1942, 1943 and 1944 shall be carried forward for one, two, three, four and five years respectively, and a loss arising in the previous years for the assessment for the years ending on the 31st day of March of the years 1945, 1946, 1947, 1948 and 1949, shall be carried forward for six years, and such loss shall be set off only against the profits and gains, if any, of the assessee from the same business, profession or vocation.

(2A) Notwithstanding anything contained in Sub-section (1), where the loss sustained is a loss falling under the head "Capital gains", such loss shall not be set off except against any profits and gains falling under that head.

(2B) Where an assessee sustains a loss such as is referred to in Sub-section (2A) and the loss cannot be wholly set off in accordance with the provisions of that subsection, the portion not so set off shall be carried forward to the following year and set off against capital gains for that year, and if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following year and so on, so however, that no such loss shall be carried forward for more than eight years :

Provided that where the loss sustained by an assessee, not being a company, in any previous year does not exceed five thousand rupees, it shall not be carried forward.

(3) When, in the course of the assessment of the total income of any assessee, it is established that a loss of profits or gains has taken place which he is entitled to have set off under the provisions of this section, the ITO shall notify to the assessee by order in writing the amount of the loss as computed by him for the purposes of this section."

18. Sections 139(1) to 139(5) of the IT Act, 1961, as amended by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985 (corresponding to Section 22 of the IT Act, 1922) are reproduced hereunder :

"Section 139--Return of income (As on 1st April, 1985) :

(1) Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed--

(a) in the case of every person whose total income or the total income of any other person in respect of which he is assessable under this Act, includes any income from business or profession, before the expiry of four months from the end of the previous year or where there is more than one previous year from the end of the previous year which expired last before the commencement of the assessment year, or before the 30th day of June of the assessment year, whichever is later;

(b) in the case of every other person, before the 30th day of June of the assessment year :

Provided that, on an application made in the prescribed manner, the ITO may, in his discretion, extend the date for furnishing the return, and notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of Sub-section (8).

(1A) Notwithstanding anything contained in Sub-section (1), no person need furnish under that sub-section a return of his income or the income of any other person in respect of whose total income he is assessable under this Act, if his income or, as the case may be, the income of such other person during the previous year consisted only of income chargeable under the head "Salaries" or of income chargeable under that head and also income of the nature referred to in any one or more of Clauses (i) to (ix) of Sub-section (1) of Section 80L and the following conditions are fulfilled, namely :

(a) where he or such other person was employed during the previous year by a company, he or such other person was at no time during the previous year a director of the company or a beneficial owner of shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than twenty per cent of the voting power;

(b) his income or the income of such other person under the head "Salaries" exclusive of the value of all benefits or amenities not provided for by way of monetary payment, does not exceed eighteen thousand rupees;

(c) the amount of income of the nature referred to in Clauses (i) to (ix) of Sub-section (1) of Section 80L, if any, does not, in the aggregate, exceed the maximum amount allowable as deduction in his case under that section; and

(d) the tax deductible at source under Section 192 from the income chargeable under the head "Salaries" has been deducted from that income.

Explanation. : [Omitted by Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985].

(2) In the case of any person who, in the ITO's opinion, is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the ITO may, before the end of the relevant assessment year, issue a notice to him and serve the same upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :

Provided that, on an application made in the prescribed manner, the ITO may, in his discretion, extend the date for furnishing the return and, notwithstanding that the date is so extended interest shall be chargeable in accordance with the provisions of Sub-section (8).

(3). If any person who has not been sewed with a notice under Sub-section (2), has sustained a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under Sub-section (1) of Section 72 or Sub-section (2) of Section 73, or Sub-section (1) of Section 74 or Sub-section (3) of Section 74A, he may furnish, within the time allowed under Sub-section (1) or within such further time which, on an application made in the prescribed manner, the ITO may, in his discretion, allow, a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under Sub-section (1).

(4)(a) Any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in Clause (b), and the provisions of Sub-section (8) shall apply in every such case;

(b) the period referred to in Clause (a) shall be

(i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year;

(ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year;

(iii) where the return relates to a previous year relevant to any other assessment year, two years from the end of such assessment year.

(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntarily contributions referred to in Sub-clause (iia) of Clause (24) of Section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of Sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under Sub-section (1).

(4B) The chief executive officer (whether such chief executive officer is known as secretary or by any other designation) of every political party shall, if the total income in respect of which the political party is assessable (the total income for this purpose being computed under this Act without giving effect to the provisions of Section 13A) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act, shall, so far as may be, apply as if it were a return required to be furnished under Sub-section (1).

(5) If any person having furnished a return under Sub-section (1) or Sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made."

19. Under the IT Act, 1961, provisions relating to set off and carry forward of loss are contained in Sections 70 to 80 (corresponding to Section 24 of the 1922 Act). However, here we are concerned with Section 80 only. Section 80 of the IT Act, 1961, as amended by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985, reads as under :

"Section 60. -Submission of return for losses.--Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed within the time allowed under Sub-section (1) of Section 139 or within such further time as may be allowed by the ITO, shall be carried forward and set off under Sub-section (1) of the Section 72 or Sub-section (2) of Section 73 or Sub-section (1) of Section 74 or Sub-section (3) of Section 74A."

20. Before proceeding further, I consider it relevant to refer to the decision of the Supreme Court in the case of Mangalam Chemicals & Fertilizers Ltd. v. Dy. CIT (1991) 21 Tax Gazette 193 (SC)--CA No. 3235 of 1999, order dt. 2nd Aug., 1991. In this case it was held that the statutory provisions are of two types mandatory and procedural and that equal importance cannot be attached to the two areas of the statutory provisions. It was further held that whereas mandatory provisions of a statute require strict interpretation and/or require to be strictly complied with, the same may not be true in regard to the statutory provisions which are procedural. The procedural provisions are to be construed liberally. It is in the light of this fundamental rule of interpretation that one has to identify the area to which the provisions of Sections 22 and 24 of 1922 Act belong. The area of the corresponding provisions of the IT Act, 1961, such as Section 139 and Section 80, shall have also to be identified.

21. I have reproduced the relevant extracts from the decision of the Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra). It is noteworthy that their Lordships have expressed the view that Section 22 of the IT Act, 1922, is merely a procedural provision and that Section 24 is a mandatory provision of the statute. I have also reproduced the corresponding provisions of Section 139 and Section 80 of the IT Act, 1961.

22. Applying the principle laid down by their Lordships of the Supreme Court in regard to the provisions of Section 22 and Section 24 of the IT Act, 1922, to the corresponding provision of Section 139 and Section 80 of the IT Act, 1961, it cannot be disputed that Section 139 of the IT Act, 1961, is a procedural statutory provisions of the IT Act, 1961, and Section 80, which is part of Chapter-VI, is a substantive provision of the IT Act, 1961. Their Lordships of the Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra) have held that a return filed under Section 22(3) of 1922 Act (corresponding to Section 139(4) of 1961 Act) being a valid return in the eye of law, could not be ignored for the purpose of carry forward of loss as Section 24(2) confers the right to carry forward the loss to the following year(s) provided the conditions contained in sub-section are satisfied. It is thus evident from the decision of the Supreme Court that the issue was decided in favour of the assessee as the conditions contained in Section 24(2) for carry forward and set off of loss, if any, were satisfied or it may be said, there was no condition contained in the substantive provision of the Act for the carry forward of the loss to the following year(s) coming in conflict with the provisions of Section 22 of the 1922 Act.

23. In the light of the principle of law laid down by their Lordships of the Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra), if one were to interpret Section 139, as it applied upto asst. yr. 1984-85, it would not be difficult to comprehend that the restriction for carry forward of loss placed under Section 139(3) may not be applicable in view of the provisions of Section 139(4) of IT Act, 1961. This is so because similar restriction had been placed under Section 22(2A) of 1922 Act by insertion of an amendment under the IT (Amendment) Act, 1953, w.e.f. 1st April, 1952, corresponding to Section 139(3) of the IT Act, 1961. However, this interpretation placed on the provision of the 1922 Act is based on the vital fact that there was no such restriction for carry forward of the loss to the following year(s) under Section 24(2) of the 1922 Act, corresponding to the restriction placed under Section 80 of 1961 Act, w.e.f. 1st April, 1985.

24. As pointed out earlier, Section 80 of 1961 Act belongs to an area of substantive provisions of the Act. Under the 1922 Act there was no restriction corresponding to restrictions placed under Section 80 of the 1961 Act for carry forward and set off of losses, which distinguishes the decision of the Hon'ble Supreme Court for the purpose of applying the principle laid down in the case of Kullu Valley Transport Co. Ltd (supra) to the facts of this case.

25. It may also be pertinent to mention that the restriction under Section 80 upto 31st March, 1985, was of such a nature that the decision of the Supreme Court in the case of Kullu Valley Transport Co. Ltd (supra) was applicable. In order to appreciate this view, it may be relevant to refer to Section 80 of IT Act, 1961, as it existed before 1st April, 1985, which is reproduced as under :

"Section 80. Submission of return for losses--Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under Section 139, shall be carried forward and set off under Sub-section (1) of Section 72 or Sub-section (2) of Section 73 or Sub-section (1) of Section 74 or Sub-section (3) of Section 74A."

26. It is thus observed that the law upto 31st March, 1985, was in pari materia with the law as it existed in 1922 Act, because Section 80 to 1961 Act provided for carry forward of losses to the following year(s) subject to the condition that the return was filed under Section 139. Applying the analogy in the case of Kullu Valley Transport Co. Ltd (supra), it cannot be said that the return filed under Section 139(4) is not a return filed under Section 139 of the IT Act, 1961. Therefore, if any assessee had filed a return under Section 139(4), the loss determined in pursuance of such return was required to be carried forward for the purpose of set off in the following year(s). This also explains the basis for the decision of the Calcutta High Court in the case of Bangabasi Theatres (P) Ltd (supra) where it was held that the decision of the Court in Presidency Medical Centre (P) Ltd. (supra) to the effect that the loss on the basis of belated return filed under Section 139(4) is to be carried forward and set off notwithstanding the non-fulfillment of condition under Section 139(3) will cover the asst, yr. 1984-85 also. In the case of Presidency Medical Centre (P) Ltd. (supra), the issue related to asst. yr. 1964-65 and their Lordships found the principle laid down by the Supreme Court in Kullu Valley Transport Co. (P) Ltd. (supra) applicable under the provisions of IT Act, 1961, as well.

27. After the amendment of Section 80 w.e.f. 1st April, 1985, the condition imposed for the carry forward and set off of loss is that the loss which is eligible for carry forward and set off should be determined in pursuance of a return filed within the time allowed under Section 139(1) or within the extended time under the said section. Thus, the condition imposed under Section 80 (which is a substantive provision pf the Act) w.e.f. 1st April, 1985, is materially different than the condition prevailing upto 31st March, 1985. Since Section 80 of the 1961 Act belongs to the area of mandatory provisions of the Act, it was necessary to satisfy the conditions for being entitled to the benefit of carry forward and set off of loss to the following year(s). Their Lordships of the Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra) did not lay down the law that the mandatory condition under the substantive provision of the Act is to be overlooked. As pointed out earlier, their Lordships of the Supreme Court found that there was no restriction under Section 24(2) in conflict to the provisions of Section 22(3) of 1922 Act for the purpose of determination of the loss and for its carry forward and set off to the following year(s). That being so, in my humble view, the decision of the, Hon'ble Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra) is not applicable for asst. yrs. 1985-86 and 1986-87. I, therefore, reiterate that the decision of the Hon'ble Supreme Court rests on the provisions of the Act as they existed at the relevant point of time and in view of the amendment of Section 80 of the 1961 Act by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985 the ratio decidendi laid down by their Lordships of the Supreme Court in the aforementioned decision is not applicable to the facts of this case.

28. Having said so, let me now proceed to consider position of law applicable for asst. yrs. 1985-86 and 1986-87. It is well-settled principle of law that in relation to any assessment year the law applicable is the law as it stands on the first day of the relevant assessment year. One of the cases in which this principle has been enunciated is in the case of Reliance Jute and Inds. Ltd. (supra). It is also well-established principle of law that all the provisions relevant for deciding the issue have got to be read together and not in a disjointed manner. This principle has been laid down by the Hon'ble Supreme Court in the case of Sardar Arjun Singh Ahluwalia (supra). As pointed out earlier, Section 139 of IT Act, 1961, falls under Chapter XIV which deals with the procedure for filing of the return. Section 80 of 1961 Act falls under Chapter VI which deals with aggregation of income and set off or carry forward of loss. Strict compliance to the provisions of Section 80 being mandatory provision of the statute is warranted. At this stage, it may be relevant to find out the legislative intention behind amending of Section 80 of the 1961 Act, w.e.f. 1st April, 1985. The intention of the legislature can be found with the aid of the CBDT circulars issued from time to time relating to the provisions for carry forward of loss under the IT Act, 1961. As already pointed out Section 80 was amended by the Taxation Laws (Amendment) Act, 1984, and the CBDT issued explanatory notes on the amended Act vide Circular No. 397, dt. 16th Oct., 1984. Relevant portion of the circular is reproduced hereunder :

"14.1. Under the existing provisions of Section 80 relating to submission of return for losses, no loss is allowed to be carried forward and set off under Sections 72(1), 73(2), 74(1) or 74A(3) unless such loss has been determined in pursuance of a return filed under Section 139.

14.2. The Amending Act has amended Section 80 of the Act to provide that such loss shall not be allowed to be carried forward and set off unless such loss determined in pursuance of a return filed within the time allowed under Section 139(1) for furnishing a voluntary return of income or within such further time as may be allowed by the ITO.

14.3. The amendment takes effect from 1st April, 1985, and will, accordingly, apply in relation to any loss for the asst. yr. 1985-86 and subsequent years."

29. Subsequently, Section 80 was further amended by the Taxation Laws (Amendment & Misc. Provisions) Act, 1986. The CBDT had issued explanatory notes in regard to the said Act vide Circular No. 469, dt. 23rd Sept., 1986. The relevant portion of the said circular is reproduced hereunder :

"[Section 11 of the Amending Act]

(vi) Providing the date by which a return showing loss is to be furnished and treatment of returns below taxable limit 9.1 Under the existing provisions of Section 139(3) of the IT Act, as amended by the Taxation Laws (Amendment) Act, 1970, the ITO on an application made to him for this purpose is empowered to extend, in his discretion, the time for furnishing a return of loss. By the Amending Act, this power of the ITO has been withdrawn. Accordingly, as per the amended provision, if the assessee is to get the benefit of the determination of the loss or any part thereof and for its carry forward under Section 72(1) or Section 73(2) or Section 74(1) or Section 74A(3) of the IT Act, he should file the return voluntarily within the period specified in Section 139(1) or by the 31st day of July of the assessment year relevant to the previous year during which the loss was sustained. Further, as per Clause (d) of the proviso to the newly inserted Sub-section (10) to Section 139 of the IT Act, which overrides anything contained in any other provision of the IT Act, a return of loss which has been furnished after the thirty first day of July of the assessment year during which the loss was sustained, shall be deemed never to have been furnished.

9.2 The above amendment shall come into force w.e.f. 1st April, 1987, and will, accordingly, apply to the asst. yr. 1987-88 and subsequent years, 9.3 Section 139(1) of the IT Act provides that every person, if his total income or the total income of any other person in respect of which he is assessable during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person in the prescribed form and verified in the prescribed manner. This return has to be furnished within the specified period. It was held by the Supreme Court in the case of CIT v. Ranchhoddas Karsondas (1959) 36 ITR 569 (SC), that a return disclosing income below taxable limit submitted voluntarily under Section 22(1) of the Indian IT Act, 1922 [corresponding to Section 139(1) of the IT Act, 1961], is a good return and such a return voluntarily made before the assessment cannot be ignored by the ITO, This decision has been superseded by the Amending Act by inserting Sub-section (10) after Sub-section (9) of Section 139. The new Sub-section (10) provides that notwithstanding anything contained in any other provision of this Act, a return of income which shows the total income below the maximum amount which is not chargeable to tax shall be deemed never to have been furnished. As per the proviso to this sub-section, a return of income below taxable limit shall not be treated as non est in the following circumstances :

(a) return furnished in response to a notice under Section 148(2);

(b) a return of a partner of a firm;

(c) a return of a person who has claimed exemption of income from property held for charitable on religious purposes;

(d) a return of loss which has been furnished before the 21st day of July of the assessment year relevant to the previous year during which the loss was sustained;

(e) a return furnished under Sub-section (4B) in respect of a political party;

(f) a return furnished in support of a claim for refund under Section 237.

9.4. These amendments shall come into force w.e.f. 1st April, 1986, will be applicable to the asst. yr. 1986-87 and subsequent years.

9.5. It may be clarified that the assessments already completed before the enactment of the Amending Act will not be rectified. Further, keeping in view the fact that the new Sub-section (3) comes into force w.e.f. 1st April, 1987, a return of loss filed for the asst. yr. 1986-87 or earlier years within the prescribed period as per the existing provisions will not be denied the benefit of the carry forward of loss."

30. The intention of the legislature to put a curb on carry forward of loss is evident from the above circulars. In my humble view, the Tribunal in the case of United Dairies (P) Ltd. (supra) has erred to observe that the CBDT Circular No. 397, dt. 16th Sept., 1984, has been superseded by Circular No. 469, dt. 23rd Sept., 1986. In fact, Circular No. 469 supplements the former and explains the position of law on the basis of subsequent amendments made. Therefore, the observation of the Bench with due respect, I feel, is contrary to the provisions of the Act and contents of the circular. It may also be pertinent to mention that in Circular No. 469 (supra) in para 9.5, it has been mentioned that the assessments already completed before the enactment of Amendment Act will not be rectified. This has got to be understood in the light of the amendment taking place w.e.f. 1st April, 1987. The CBDT has specifically clarified that the return of loss filed for asst. yr. 1986-87 or earlier year within the prescribed period as per the existing provisions will not be denied the benefit of carry forward of loss. What the circular No. 469 clarifies is that the amendment of Section 80 w.e.f. 1st April, 1987, will not effect the legal position as it existed before the coming into force of the amendment. It nowhere states that the amendment taking place w.e.f. 1st April, 1985, would have to be over looked. Therefore, the claim that the Circular No. 469, supersedes Circular No. 397, is not well founded.

31. It may also be pertinent to mention that CBDT had issued Instructions No. 1528 to the effect that the decision of the Supreme Court in the case of Kullu Valley Transport Co. (P) Ltd. (supra) is no longer applicable in view of the incorporation of Section 139(8)(a) of the 1961 Act for levy of interest. However, in the subsequent Instructions No. 1607, dt. 14th March, 1985, it was clarified that the said instructions would be effective for asst, yr. 1984-85 only. In para 3 of the said Instructions, it has been clarified by the Board as under :

"3. As regards assessment years subsequent to asst. yr. 1984-85, Section 80 of the IT Act, 1961, has been amended by Taxation Laws (Amendment) Act, 1984, w.e.f. 9th April, 1985. Under the amended provisions carry forward and se off loss will not be allowed unless it has been determined in pursuance of a return filed within the time allowed under Section 139(1) or the time extended by the ITO."

32. Thus, none of the circulars/instructions issued by the Board support the claim of the assessee that the amended provisions of Section 80 w.e.f. 1st April, 1985, are not applicable in view of the decision of the Supreme Court in the case of Kullu Valley Transport Co. (P) Ltd. (supra). In fact, if all the circulars read carefully support the claim of the Revenue rather than the claim of the assessee. The contention advanced on behalf of the assessee that the circulars issued in contravention of law are not binding is of no consequence as I find that none of the circulars relied upon by the Revenue is in contravention of the law, as alleged. I, accordingly, dismiss this contention also raised on behalf of the assessee.

33. I would like to refer to some other decisions cited on behalf of the parties for canvassing their respective point of view. The leaned JM as also the assessee's representative has placed reliance on the following decisions of the Calcutta High Court :

(a) CIT v. Bangabasi Theatres (P) Ltd., order dt. 7th Nov., 1990 (supra); and

(b) Presidency Medical Centre (P) Ltd. v. CIT, order dt. 8th Oct., 1974 (supra).

In the case of Presidency Medical Centre (P) Ltd. (supra) the issue related to asst. yr. 1964-65. Their Lordships of the Calcutta High Court held that a belated return filed under Section 139(4) was to be taken into account for determination of the loss and the assessee to be allowed carry forward and set off of loss to the following year(s). It is to be noted that the restriction placed under Section 80 of 1961 Act before 1st April, 1985, was that the return should have been filed by the assessee under Section 139 of 1961 Act. Since admittedly the return had been filed by the assessee under Section 139, therefore, the decision is not applicable in regard to the provisions of the Act applicable for asst. yr. 1985-86 onwards. The following observation of their Lordships, however, is noteworthy :

"We have noticed the changes made by the IT Act, 1961. The main significant change seems to be that the discretion that was given to the ITO to extend the time for filing the return has been taken away. But the right of the assessee to file the return before the period of assessment and before the. period mentioned in Sub-section (4) of Section 139, if it is made within the period stipulated in Sub-section (1) of Section 139, which is similier to the time mentioned in Sub-sections (1) and (2) of Section 22 of the 1922 Act, is not in any way affected. If that is the position the return can be filed within the time specified by Sub-section (4) of Section 139 and once that return is filed within that time, it would be deemed to be in accordance with law and then loss had to be determined under the relevant provisions of the 1961 Act which embodies principles similar to Section 24(2) of the old Act in this respect. If that is the position, in our opinion, the alteration in the new Act by which there has been curtailment of right of the ITO to extend the time, does not materially affect the situation in this case."

As is evident from the above finding, the observations relate to the law as it existed upto 31st March, 1985. The decision is not an authority for the law as applicable w.e.f. 1st April, 1985.

34. In the case of Bangabasi Theatres (P) Ltd (supra), the issue related to asst. yr. 1984-85 and on the basis of provisions of Section 80, as it applied for asst. yr. 1984-85, it was held that the assessee was entitled to carry forward and set off of business loss notwithstanding the fact that the return of income had not been filed within the time allowed under Section 139(3) but within the time allowed under Section 139(4) of 1961 Act. As in the case of Presidency Medical Centre (P) Ltd. (supra), the issue involved in this case related to assessment year prior to 1985-86 and, therefore, the decision is of no assistance relating to the controversy involved in the years under appeal. The following observations of the Hon'ble Court can at best be understood as obiter dicta and in any case it does not advance the case of the assessee :

"2. The only contention raised before us is whether in view of the Circular No. 1807, dt. 14th May, 1985, the decision rendered in Presidency Medicial Centre (P) Ltd.'s case (supra) will govern the asst. yr, 1984-85. It has been laid down in the said circular that the Department accepted the decision in Presidency Medical Centre (P) Ltd.'s case (supra) prior to asst. yr. 1984-85. We are concerned here with the asst. yr. 1984-85. In our view the amendment was made in Section 139(1) only from 1st April, 1987, which will govern the asst. yr. 1987-88 and subsequent years. We do not find that the asst. yrs. 1984-85 to 1986-87 will be separately treated because of the said circular of the Board. We may mention that an amendment was made in Section 139 in 1970. The principle in Presidency Medical Centre (P) Ltd.'s case (supra) was applied by this Court even after the said amendment had been made in 1970. This Court in CIT v. Nagpur Steel & Alloys Ltd. (1988) 169 ITR 466 (Cal) considered a similar case. In that case one of the questions were as follows :

'Whether, on the facts and in the circumstances of the case and having regard to the provisions of Section 139(3) of the IT Act, 1961, limiting the time within which loss should be declared, the Tribunal was justified in holding that the assessee was entitled to carry forward the loss even though the loss return was filed within the time prescribed under Section 139(3) as amended by the Taxation Laws (Amendment) Act, 1970 ?' This Court following the decision in Presidency Medical Centre (P) Ltd.'s case (supra) answered the said question in the affirmative and in favour of the assessee. In our view, the sard decision will cover the asst. yr. 1984-85. The changes made in 1986 which will come into force on and from the asst. yr. 1987-88 will not take out the asst. yr. 1984-85 from the ambit of the decision in Presidency Medical Centre (P) Ltd. 's case (supra). In that view of the matter, we answer the question in this reference in the affirmative and in favour of the assessee."

35. In the case of Regent Estates Ltd. v. ITO (supra), the Tribunal decided the issue in favour of the assessee for asst. yr. 1986-87 on the basis of Circular No. 469, dt. 23rd Sept., 1986, which, according to the Tribunal, explained the amendment made in Section 80 by Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985. The Bench referred to the decision of the Calcutta High Court in the case of Preidency Medical Centre (P) Ltd. (supra) and Circular No. 469, of CBDT to hold that it was clear from the decision and the circular that the assessee is entitled for the carry forward of loss, even for asst. yr. 1984-85. I have pointed out elsewhere in this order that Circular No. 469, dt. 23rd Set., 1986, explained the amendment made under the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, effective from 1st April, 1987. As already pointed out, the decision of the Calcutta High Court in the case of Presidency Medical Centre (P) Ltd. (supra) related to asst. yr. 1964-65 and the amendment in Section 80 w.e.f. 1st April, 1985, was neither relevant nor considered by the Hon'ble High Court.

36. It is thus evident that the decision of the Tribunal in the case of Regent Estates (P) Ltd. (supra) is per incuriam. In the case of Municipal Corporation of Delhi v. Gurnam Kaur (supra), their Lordships of the Supreme Court held that a decision should be treated per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. I may also mention that a decision per incuriam means through inadvertence. A decision when given in ignorance of the terms of the statute or of a rule having the force of law is a decision per incuriam. In this case, reliance on the decision of the Calcutta High Court and the CBDT circulars is misplaced and, accordingly, the decision of the Tribunal is rendered irrelevant and not having any persuasive value.

37. In the case of United Dairies (P) Ltd. (supra) reliance has been placed on the decision of the Calcutta Bench of the Tribunal in the case of Regent Estates (P) Ltd. (supra). In this case also, the Tribunal accepted the contention on behalf of the assessee that Circular No. 397, dt. 16th Oct., 1984, on the basis of which the jurisdictional High Court of Calcutta had rendered the decision in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. (supra), in favour of the Revenue was superseded by the Circular No. 469, dt. 23rd Sept., 1986. As already pointed out, Circular No. 469 (supra) was relating to an amendment made w.e.f. 1st April 1987, and had no relevance to the amendment made w.e.f. 1st April, 1985, and Circular No. 397, dt. 16th Oct., 1994. Thus, the abovementioned decision of the Tribunal is also per incuriam and the decisions of the jurisdictional High Court relied upon are distinguishable on facts as well as in law.

38. That brings me to the decision of Madhya Pradesh High Court in the case of CIT v. Dogar Tools (P) Ltd. (supra) in favour of the assessee. In this case, their Lordships of the Madhya Pradesh High Court held that the decision of the Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra) was applicable till asst. yr. 1988-89 and as such the assessee was entitled to the benefit of carry forward of loss determined in pursuance of a return filed under Section 139(4) notwithstanding the fact that the return of income was not filed within the time allowed under Section 139(3). In this case, the Tribunal had cancelled the order of the GIT passed under Section 263 on the ground that the decision of the Supreme Court in the case of Kullu Valley Transport Co. Ltd (supra) was good law till asst. yr. 1988-89. Their Lordships of the Madhya Pradesh High Court have accepted the finding of the Tribunal. It is relevant to note that the Hon'ble High Court have not discussed the relevant provisions of the Act and no reasons have been given for confirming the view adopted by the Tribunal. However, I may hasten to add that the mere fact that the Hon'ble High Court has not dwelt upon the provisions of the Act and not given the reasoning for arriving at the conclusion does not render the decision as ineffective for any Tribunal of subordinate jurisdiction. This decision is in favour of the assessee and, therefore, I feel myself duty-bound to consider the same with utmost respect.

39. At this stage it would be relevant to point out that the Kerala High Court in the case of Smt. Gunavathy Dharasmsy (supra) held that w.e.f. 1st April, 1985, no loss would be allowed to be carried forward or set off unless the return under Section 139(1) had been filed within the time allowed under Sub-section(1) of Section 139 for filing the return or within such further time allowed by- the ITO. Their Lordships of the Kerala High Court have considered the provisions of the 1922 Act vis-a-vis the corresponding provisions under the 1961 Act. The legislative history and the amendments effected to Section 80 have also been taken into account in arriving at the conclusion. Their Lordships have also pointed out that the reliance on the decision of the apex Court in CIT v. Manmohan Das (1966) 59 ITR 699 (SC) by the Tribunal was misplaced as that was a decision rendered under the IT Act, 1922, whereafter the position has substantially been changed. Their Lordships have also pointed out that the Tribunal did not notice the provisions of Section 80 as it stood at the relevant time.

40. Thus, it is seen that the issue involved herein has been decided directly by two High Courts. Whereas the Madhya Pradesh High Court in the case of Dogar Tools (P) Ltd. (supra) has taken a view in favour of the assessee by accepting the decision of the Tribunal without reference to the relevant provisions of the Act, the Kerala High Court in the case of Smt. Gunavathy Dharamsy (supra) has elaborately considered the provisions of the Act and arrived at a decision to the contrary.

41. In the event of divergent views having been taken by the various High Courts other than the jurisdictional High Court, the Tribunal is bound to adopt a view on merits taking into consideration the diverse views. In the case of CIT v. Bharat Saw Mill (1992) 198 ITR 553 (Ori), the Tribunal had decided the appeal on noting a divergence of opinion amongst several High Courts and following the view favourable to the assessee. Their Lordships of the Orissa High Court held that such an approach was not proper. It was held that the Tribunal was bound to decide the case on merits taking into consideration the diverse views and arrive at a decision on its own. Their Lordships of Punjab & Haryana High Court in the case of Nandlal Sohanlal v. CIT (1977) 110 ITR 170 (P&H)(FB) held as under :

'I am afraid I cannot subscribe to the proposition that a Judge faced with a conflict of precedent should abdicate his judgment and accept the view which is favourable to the assessee. It is only where a Judge finds that no equally reasonable views are possible and he is unable to decide which is the better view, that he may adopt the rule of interpretation that the view favourable to the assessee might be accepted.' Their Lordships of the Supreme Court in the case of CWT v. Kripashankar Dayashanker Worah (supra) held as under :

"It is true that a taxing provision must receive a strict construction at the hands of the Courts and if there is any ambiguity, the benefit of that ambiguity must go to the assessee. But that is not the same thing as saying that a taxing provision should not receive a reasonable construction. If the intention of the legislature is clear and beyond doubt then the fact that the provision could have been more artistically drafted cannot be a ground to treat any part of a provision as otiose. So long as the intention of the legislature is clear and beyond doubt, the Courts have to carry out that intention."

42. Their Lordships of the Supreme Court in the case of CIT v. Cellulose Products of India Ltd. (1991) 192 ITR 155 (SC) explained the circumstances under which the rule of interpretation with a provision granting relief should be construed liberally so as to effectuate the object thereof may be taken recourse to. Their Lordships held--"It is only when there is any genuine doubt about the interpretation of a fiscal statute or where two opinions are capable of being formed that the rule of interpretation that a provision granting relief should be construed liberally so as to effectuate the object thereof may be taken recourse to."

43. Dealing with the contentions advanced on the basis of the decisions of the Supreme Court in the cases of CIT v. Vegetable Products Ltd. (1973) 88 3TR 192 (SC) and CIT v. Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC) that the view favourable to the assessee should be adopted, their Lordships of the Bombay High Court in the case of CIT v. Thana Electricity Supply Ltd. (1994) 206 ITR 727 at p. 744 (Bom) held as under :

"We have considered the submissions. We have also carefully considered the decisions of the Supreme Court. We, however, find it difficult to accept this submission, as in our opinion, the observations of the Supreme Court in those decisions have been stretched too far. The Supreme Court in CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC) (at p. 195) merely observed :

'If we find that language to be ambiguous or capable of more meanings than one, then we have to adopt that interpretation which favours the assessee, more particularly so because the provision relates to imposition of penalty.' Similarly, in CIT v. Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC), at p. 240, the Supreme Court had observed as follows :

'If a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well-accepted view of law.' The above observations will be applicable only if the Court which is called upon to decide the issue is satisfied that two views are reasonably possible, one of them being favourable to the assessee. As observed by the Supreme Court in Escorts Ltd. v. Union of India and Ors. (1993) 199 ITR 43 (SC) (at p. 60) :

'In our view, there was no difficulty at all in the interpretation of the provisions. The mere fact that a baseless claim was raised by some over-enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions.....' It is, therefore, clear that it is the satisfaction of the Court interpreting the law that the language of the taxing provision is ambiguous or reasonably capable of more meanings than one, which is material. If the Court does not think so, the fact that two different views have been advanced by parties and argued forcefully, or that one such view which is favourable to the assessee has been accepted by some Tribunal or High Court, by itself will not be sufficient to attract the principle of beneficial interpretation."

44. I have elaborately discussed the various provisions of the Act and sought to justify the conclusion that the decision of the Supreme Court in the case of Kullu Valley Transport Co. Ltd. (supra) is inapplicable after the amendment of Section 80 of 1961 Act, w.e.f. 1st April, 1985. I am tempted to refer to the decision of the jurisdictional High Court of Calcutta in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. (supra) where their Lordships of the Calcutta High Court referred to the CBDT Circular No. 397, dt. 16th Oct., 1984 and held as under ;

"Our attention has also been drawn to paras 14,1, 14.2 and 14.3 of Circular No. 397, dt. 16th Oct., 1984. The extract of the relevant portion of the said circular is set out below [see (1985) 152 ITR (St) 36) :

'Submission of return of loss--Section 80 14.1 Under the existing provisions of Section 80 relating to submission of return for losses, no loss is allowed to be carried forward and set off under Sections 72(1), 73(2), 74(1) or 74A(3) unless such loss has been determined in pursuance of a return filed under Section 139.

14.2 The Amending Act has amended Section 80 of the Act to provide that such loss shall not be allowed to be carried forward and set off unless such loss is determined in pursuance of a return filed within the time allowed under Section 139(1) for furnishing a voluntary return of income or within such further time as may be allowed by the ITO.

14.3 The amendment takes effect from 1st April, 1985, and will accordingly, apply in gelation to any loss for asst. yr. 1985-86 and subsequent years. (Sec. 18 of the Amending Act).' We find that the position as clarified by the Board is based on the correct construction of the provisions. We also share the view that the amendment shall apply to loss arising in asst. yr. 1985-86 and not in the earlier years"

(Emphasis, italicised in print, supplied) Admittedly, the matter involved in the case before the Calcutta High Court was relating to asst. yr. 1983-84 and the issue involved was as to whether in respect of the return filed after 1st April, 1985, the amended provisions of Section 80 of 1961 Act w.e.f. 1st April, 1985, were attracted. The above observation of their Lordships quoted by me, it has been argued, is thus obiter dicta and not ratio decidendi. However, in the present case it is observed that there is a divergence of opinion amongst the two High Courts, viz., that of Madhya Pradesh High Court and of Kerala High Court. Apart from the reasons given above for following the decision of the Kerala High Court in.preference to the decision of the Madhya Pradesh High Court, the added reason for following the said decision is that obiter dicta in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. 's case of the jurisdictions! High Court of Calcutta also affirms the view taken by the Kerala High Court. Therefore, when the said decision of the Madhya Pradesh High Court in the case of Dogar'Tools (P) Ltd. (supra) is placed on one side of the scale of justice and that of the Kerala High Court in the case of Smt. Gunavathy Dharamsy (supra) on the other side coupled with the decision of jurisdictional High Court in the case of Krishna Chandra Dutta (Cookme) (P) Ltd. it is not difficult to appreciate that the balance is tilted heavily oh the side of Kerala High Court judgment. It may also be pertinent to mention that the Calcutta Bench of the Tribunal in the case of Asstt. CIT v. M.K. Chatterjee [ITA No. 213/Cal/98, order dt. 27th Sept., 2002] has also decided the issue in favour of the Revenue. Though different reasoning has been adopted in that order than the reasoning given by me in this order, yet the conclusion is the same as arrived at by me.

45. Taking the totality of the facts and circumstances of the case into consideration in the light of the legal principles discussed, I concur with the conclusion of the learned AM that the assesses is not entitled to carry forward and set off of losses determined for asst. yrs. 1985-86 and 1986-87 as the condition for such carry forward of loss placed under Section 80 of the 1961 Act is admittedly not satisfied in this case.

46. The case records may be placed before the Division Bench for passing consequential order in accordance with majority view.

B.k. Mitra, J.M.

1. On a difference of opinions between the Members constituting this Division Bench, the following question was referred to a Third Member for his opinion under Section 255(4) of the IT Act, 1961 :

"Whether, on the facts and in the circumstances of the case, the Tribunal should have allowed carry forward of the loss aggregating to Rs. 179.64 crores, for asst. yrs. 1985-86 and 1986-87 or the Tribunal should have declined the carry forward of the aforesaid losses of Rs. 179.64 crores in view of the amendment in Section 80 w.e.f. 1st April, 1985, and in view of the fact that income-tax returns were filed beyond the time-limit allowed under Section 139(1) ?"

2. Hon'ble Vice President (KZ) has, as Third Member in this case and taking the totality of the facts and circumstances of the case into consideration in the light of the legal principles discussed in his order, concurred with the conclusion of the AM that the assessee is not entitled to carry forward and set off of losses determined for asst. yrs. 1985-86 and 1986-87 as the conditions for such carry forward of loss placed under Section 80 of the 1961 Act are not satisfied.

3. In accordance with the majority view, therefore, the appeals are dismissed.